Morgan Stanley says China’s ‘best AI enabler’ is worth $200

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Morgan Stanley says China’s ‘best AI enabler’ is worth $200

Rising demand in the artificial intelligence space could mean a boost in shares of Alibaba , according to Morgan Stanley. Analyst Gary Yu reiterated his overweight rating on the e-commerce giant and has a $180 price target on the name, implying nearly 37% upside from Tuesday’s close. Using a sum-of-the-parts valuation analysis, Yu said the stock could be worth $200 per share, or about 52% higher than its latest closing price. Alibaba shares have already soared more than 57% year to date, outpacing the broader market. “Alibaba is a major AI enabler poised to benefit from surging AI inference demand,” the analyst wrote in a Tuesday note entitled “China’s Best AI Enabler.” “AI inference demand has surged after DeepSeek’s moment in January . While the three major hyperscalers have significantly hiked capex since 2H24, we believe Tencent and Bytedance prioritize their GPU capacity for internal demand, leaving AliCloud as a unique [cloud service provider] with sizable allocation for external customers.” BABA .SPX YTD mountain BABA vs. S & P 500, year-to-date Yu estimates that year-over-year cloud revenue growth could rise from 13% in the third quarter to 18% in the fourth quarter, and ultimately to 25% in fiscal 2026. The analyst also said that a cloud revenue beat in its fourth-quarter results before the bell Thursday could serve as a potential near-term catalyst for the stock. Additionally, seeing that Alibaba is an “early AI adopter” relative to its e-commerce peers, Yu thinks that the medium- and long-term potential of an AI-driven lift to the company’s core e-commerce businesses has not been taken into account in its current valuation. Alibaba has a forward price-to-earnings ratio of 13.1, according to FactSet. “With better AI offerings and shopping experience, we believe user engagement and time spent will improve, driving increasing e-commerce activities,” Yu wrote. “We expect online penetration expansion to drive better GMV [gross merchandise value] and an increase in take rate from better eCPM [effective cost per mile] to drive revenue expansion.” A majority of analysts on Wall Street have taken a bullish stance on Alibaba, with 41 out of 43 analysts covering the stock having a strong buy or buy rating, per LSEG. The remaining two analysts have taken a neutral view with a hold rating. Shares were more than 1% higher in morning trading during Wednesday’s session.

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